An Economic Future with Smaller Numbers

An Economic Future with Smaller Numbers

In 1998, a study prepared for AIMS projected that the population in Atlantic Canada would grow by some 35,000 people in the ensuing ten years; as of 2006 our population has actually declined by some 47,000.

An Economic Futureis an update of the ground breaking 1998 AIMS’ study Population Change in Atlantic Canada, by the same authors, Frank Denton, Christine Feaver and Byron Spencer of McMaster University. It was one of the first papers to ring the public alarm bells of the impending population change and what it could mean for our labour force, our economy and our quality of life.

Based on the authors’ best estimates of likely trends in population decline and work force participation, they project a total population decline in Atlantic Canada of 272,800 people by 2046 and a resulting loss of roughly 100,000 workers in each of New Brunswick, Newfoundland and Nova Scotia, with PEI losing over 13,000.

But not all is entirely lost, yet. The authors argue that, while we face serious challenges, and no single policy is the silver bullet, we can mitigate the impacts of the massive demographic shift we are experiencing.

In fact, one impact is apparent in the data already: our success in increasing labour force participation, especially among women.

Based on the data available in 1998 the authors estimated that our labour force would continue to grow between 1996 and 2006, likely increasing by some 29,000 workers. Based on more recent data, though, we have actually seen our labour force increase by some 123,000 workers in just the last 10 years, even as our population fell. At the same time the female share of the work force has grown from 44% to 48%, which is good news considering that their share of the population is also increasing and so they will make up an even larger proportion of our workforce.

“We knew we were headed for trouble,” says AIMS President and CEO Charles Cirtwill. “But this report shows the crunch is happening now, and we will continue to lose ground. We have to recognize that this will hurt our economy, our region, our future.”

The authors “conclude again that the aging of Atlantic Canada’s population is inevitable and easily anticipated far in advance, and should not be ignored in framing of economic and social policy.”

“While slower growth and aging affect the labour force, and hence a region’s ability to generate output and income, they also affect virtually all other aspects of the economy. They affect patterns of saving and household consumption, and hence investment. They have differential effects on sales, production, and investment levels in different industries, and their impact thus falls unevenly on different areas within a region. They affect the tax bases from which provincial governments must draw revenue, and they affect the demands for government program expenditures. Work carried out in other contexts suggests the feasibility and importance of anticipating the effects of population change on government expenditures.”

Particularly hard hit in the latest population projections is Newfoundland and Labrador. It will continue to see a drop in population to about 390,000 by 2046; that’s a drop of 24% from today’s 510,000 people. Nova Scotia’s population is projected to drop from 938,000 to 864,000. New Brunswick’s population is expected to drop from 746,000 to 667,000.

The paper explains: “In 2006, the region accounted for 7.2 percent of Canada’s population; by 2026, the share is projected to fall to 5.9 percent, and by 2046 to 4.9 percent. On that basis, four decades from now, the Atlantic region’s share of Canada’s population will be less than half of what it was when Newfoundland and Labrador entered Confederation.”